1
17 July 2017 Monday Report Economy Markets Swiss Market Equities Sentiment of traders Performances Today’s graph This document has been issued for information purposes. The views and opinions contained in it are those of Bordier & Cie. Its contents may not be reproduced or redistributed. The user will be held liable for any unauthorised reproduction or circulation of this document, which may give rise to legal proceedings. All the information contained in it is provided for information only and should in no way be taken as investment advice. Furthermore, it is emphasized that the provisions of our legal information page are fully applicable to this document and namely provisions concerning the restrictions arising from different national laws and regulations. Consequently, Bordier Bank does namely not provide any investment services or advice to “US persons” as defined by the Securities and Exchange Commission rules. Furthermore, the information on our website – including the present document – is by no mean directed to such persons or entities Bonds ASML (Satellites) is due to report its Q2 results on 19 July. The market environment remains robust; the group should also benefit from TSMC’s positive intentions as regards EUV machines. ASTRAZENECA (Core Holdings): according to Bloomberg, Pascal Soriot (CEO) has said he will remain at the helm of AstraZeneca, putting an end to rumours. DORMAKABA (Core Holdings) has announced another acquisi- tion: Canadian Skyfold Investment Inc., a Canadian firm specialis- ing in automated mobile walls, with 180 employees and sales of c. CHF 30m. In our opinion, the acquisition multiple of 8.5x EV/ EBITDA is reasonable. FAURECIA (Satellites) is expected to report strong interim results this Friday. Sales are predicted to have grown 7.5% to €8.5bn and operating profit 14% to €559m (with the margin up 150 bps at 6.6%). Given the ground gained in H1 and strong orders for H2, the group could upgrade its full-year guidance. UNILEVER/RECKITT B (Core Holdings): according to UK press reports, Unilever is in the running to buy Reckitt’s food division, which Reckitt announced its intention to sell off when it bought Mead Johnson. Unsurprisingly, the stated price of £2.2bn equates to a valuation of 14-15x EBITDA. For Unilever, the division’s strong margin (28.7%) will boost EPS before synergies, though we would rather have seen the group focus on the HPC sector. WIRECARD (Core Holdings), which is due to report its Q2 results on 17 August (probably with a preliminary release at end July), has upgraded its FY 2017 EBITDA outlook from €382-400m to €392- 406m. Organic growth remains strong, and integration of recent acquisitions in Asia is proceeding more quickly than expected. To be monitored this week: AFD June foreign trade and watch exports. The following companies are due to release their H1/Q2 results: SGS, Banque Cantonale du Jura, ZGKB, BLKB, Kühne + Nagel, Novartis, Georg Fischer, Temenos, Rieter, ABB, Givaudan, Leon- teq, Panalpina and BB Biotech. Stock market In the end, Janet Yellen enabled indices to end the week at record highs by implying that rates might rise less quickly than forecast. In other news, banks reported strong results. The tone will be set by the ECB on Thursday and, above all, a raft of quarterly results. We are going with the flow of prevailing optimism. Currencies USD fell victim to profit-taking against JPY and GBP (USD/JPY: 112.6; GBP/USD: 1.3085) but held steady against CHF and EUR (USD/CHF: 0.9645; EUR/USD: 1.1450). Gold bounced back to $1,230/oz but could test support at $1,194/oz. In a market lack- ing momentum, forex dealers will be focused on Thursday’s ECB meeting on QE. Our ranges – EUR/USD: supp. 1.1313, res. 1.1554; USD/CHF: supp. 0.9511, res. 0.9771; USD/JPY: supp. 110.95, res. 113.73; EUR/CHF: supp. 1.0830, res. 1.1100. Through its chair Janet Yellen, the Fed attempted to reassure investors on the pace of rate hikes and balance sheet reduction amid uncertainty as to the acceleration in inflation… The path to normalisation will be a long and gradual one. This was all it took to keep markets in risk-on mode, also helped by the partial recovery in oil prices (up 3.7%). Developed market equities gained 1.8% in the week and emerging equities 4.6%, well ahead of safe sover- eigns (US Treasuries gained 0.7% and the German Bund 0.4%), the dollar (dollar index: down 0.9%) and the yen (down 1.2% vs. USD). To be monitored this week: import and export price indices, con- fidence among homebuilders (NAHB index), building permits and housing starts in the US; ECB meeting and consumer confidence in the eurozone. In the US, confidence among SMEs (NFIB) dipped in June (from 104.5 to 103.6) but remained high; retail sales were disappoint- ing, down 0.2% in June, vs. a 0.3% decline in May and expected growth of 0.2%; and the University of Michigan Index of Consumer Sentiment fell 2 points to 93.1. Annual inflation held steady at 1.7% excluding energy and food: still no acceleration. In the eurozone, the Sentix Investor Confidence Index stabilised at its highest level since 2007, coming in at 28.3 in July, while the upturn in industrial production in May (up 1.3% MoM and 4% YoY) confirmed the cycli- cal bright spot, as in China, where exports were up 11.3% YoY and imports up 17.2% YoY in June, and Q2 GDP growth came in at 6.9%. As at 14.07.2017 07.07.2017 31.12.2016 SMI 9034.57 1.70% 9.91% Europe Stoxx 600 386.84 1.75% 7.03% MSCI USA 2341.99 1.42% 9.99% MSCI Emerging 1047.05 4.45% 21.43% Nikkei 225 20118.86 0.95% 5.26% As at 14.07.2017 CHF vs. USD 0.9654 -0.09% 5.28% EUR vs. USD 1.1448 0.50% 8.53% 10-year yield CHF (level) 0.01% 0.00% -0.20% 10-year yield EUR (level) 0.53% 0.57% 0.11% 10-year yield USD (level) 2.32% 2.39% 2.45% Gold (USD/per once) 1 227.67 1.44% 6.06% Brent (USD/bl) 48.68 3.71% -14.16% Source: Datastream Since The lack of inflation, and thus the Fed’s renewed accommodative tone, once again enabled credit to outperform sovereign debt, with both investment grade and high-yield credit posting average gains of 0.7%. Momentum remains positive in emerging debt (up 1.0% in the week), now supported by the stabilisation or even slight upturn in commodities. Source: Thomson Reuters Datastream, 17.07.2017 United States Retail sales YoY 2008 2009 2010 2011 2012 2013 2014 2015 2016 -15 -10 -5 0 5 10 -15 -10 -5 0 5 10 Total ex-autos Total nominal Total ex-autos and gasoline
